One-time UPI mandate for life, health premium payment gets IRDAI nod 

Insurance regulator IRDAI permitted life and health insurers to get a one-time mandate facility through Unified Payments Interface (UPI) from prospective health and life insurance customers.

“This service is useful where the customer prefers to authorise a block on the funds without immediate debits” even while facilitating, through such a mandate, smoother processing of the transaction leading to issue of the policy, the Insurance Regulatory and Development Authority of India said in a circular on Tuesday.

Fixing March 1, 2025 as deadline for insurers to go live and offer the facility, which will be known as Bima Applications Supported by Blocked Amount, the regulator said transfer of money to the insurer under the Bima-ASBA from the customer being onboarded will happen only when the policy is issued.

“Amount towards the premium will be debited only after the insurer decides to accept the proposal. In case, the insurer does not accept the proposal, the amount shall be unblocked, released and available at the disposal of the prospect,” IRDAI Chief General Manager R.K.Sharma said in the circular. Initially, Bima-ASBA will be extended to individual policyholders.

Listing obligations of the insurers, the regulator said the premium sum blocked will be specific to the proposal form and will be done only with the explicit consent of the prospective customer. In case the amount of initial premium blocked in more that the premium collected, consequent to the insurer’s underwriting decision, the company should only collect the reduced amount through the facility. When the premium to be charged is more than the blocked amount, the insurer must use the facility to modify the mandate through one time authorisation from the customer.

The approval for the one time mandate facility is in line with a September 2024 master circular on protection of policyholders’ interest. IRDAI said approval of the facility follows representations insurers made from a perspective of ensuring operational ease. However, no proposal should be rejected on account of the prospective customer not opting for Bima-ASBA.